04 September 2008 | Paul Snell
CEOs should not underestimate the importance of sustainable procurement to their business.
A study into green purchasing by global consultancy Arthur D Little said three factors - increasing exposure to risk, demand and expectation from shareholders and improving business performance - meant the CEO will ultimately be held accountable for a company's green procurement performance.
"The CEO cannot delegate his or her accountability for sustainable procurement. But he or she typically delegates responsibility for making it happen to the CPO. And the pressure on the CPO to deliver the required results - from a CEO whose risk exposure in relation to supplier activities is as great as any the company itself presents, but whose control over those activities is much less - is likely to be intense," the study said.
The study said companies had three approaches they could take towards sustainable purchasing: acting reactively, when forced to by a loss of business or by regulation; employing a "keep-up" strategy, following regulation and their peers (this would protect their current revenue, but would not generate any extra) and "anticipation", the most effective strategy. Here businesses evaluate their procurement options in advance and make decisions based on the best benefits the function can provide.